Fed Governor Christopher Waller says more interest rate hikes will likely be needed to bring inflation back to the 2% target, but signaled flexibility on timing that leaves the door open to a pause at the October meeting. His remarks add to a string of Fed officials pointing to patience in the near term while keeping further tightening on the table.
Federal Reserve Governor Christopher Waller said Thursday that additional hikes to support a timelier return of inflation to our 2% goal will likely be needed if the economic data keeps coming in as expected, in remarks prepared for delivery at a Central Bank of Turkey forum in Istanbul. He added that the hikes do not need to arrive at consecutive meetings, but should come within an acceptable period of time, leaving the Fed room to pause this month.
Investors bet on a December move
His remarks reinforce recent signals that the Fed will likely hold its policy rate steady at the current 3.75% to 4% range when it meets October 27-28, with a hike seen more likely at the December 8-9 meeting if the economy keeps showing low unemployment, continued growth and little progress on inflation. The Fed raised its policy rate by a quarter of a percentage point in September, and projections released at the time showed most officials expecting one more quarter-point increase by year-end. Investors currently see the Fed holding rates steady at the October meeting, a week before congressional elections, before raising them six weeks later at the December gathering.
Waller did not say how far the policy rate may still need to climb, though he said the case for higher rates has grown clearer as the economy strengthens, an energy price shock tied to the Iran war remains unresolved, and the artificial intelligence buildout adds to inflation through higher demand for key goods and services.
A third Fed official signals patience
Waller is the third senior Fed official in recent days to signal a willingness to wait before raising rates again, while leaving open the possibility of further rate hikes later. The caution comes without any public comment from Fed Chairman Kevin Warsh, who took the job saying he wanted to avoid giving too much guidance on coming policy moves.
He argued that recent comments from his colleagues have let markets set probabilities on the rate path without the Fed committing to any outcome, an approach he said avoids the volatility that can follow if investors get no signal at all. According to Reuters: "there is no fixed final destination", Waller said, describing how policymakers can point toward their likely direction while leaving room to adjust hikes as new data arrives.
Source: Economy News
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